In today’s briefing:
- Ohayo Japan | Political Uncertainty V. AI Boom
- Japan Morning Connection: Sakae Takaichi Win Pulls Japan to the Right
- China & HK Strategy: 3Q25 Preview – Beauty and the Beast
Ohayo Japan | Political Uncertainty V. AI Boom
- US indexes gained over 1% for the week, driven by AI optimism despite a U.S. government shutdown
- Sanae Takaichi won the LDP presidential election – strong on Japan defence, fiscal spending, growth and immigration controls.
- Yaskawa Electric raised its FY 2026 forecast, expecting 48 billion yen in operating income (prev. 43b), and 525 billion yen in sales, surpassing estimates.
Japan Morning Connection: Sakae Takaichi Win Pulls Japan to the Right
- No BOJ hike means bonds, banks, yen and insurance down, while defense and nuclear will do well.
- She is seen as a China-hawk so watch for weakness in China related plays.
- Overall expect a big leg higher for markets including in yen sensitive SPE and AI related.
China & HK Strategy: 3Q25 Preview – Beauty and the Beast
- The 3Q25 results will be testing grounds to justify the multiple expansion, as our coverage saw a 2% downgrade in FY25 earnings since the interim announcement.
- Seven stocks will have over 100% YoY earnings growth in 2H25, implying strength in 3Q25 as well. Three stocks, however, will experience earnings decline.
- The stronger ones are China Eastern Airlines (670 HK), Shanghai Electric Group Company (2727 HK), China Southern Airlines (1055 HK), and Sany Heavy Equipment (631 HK).
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